Sunday, September 17, 2006

Sunday Thought: Reality Check

I've not posted a Sunday thought piece in a few weeks. --My apologies, been thinking about other, if related, things. But a paper came in this week that is rich enough that we all really ought to take a look at it and think about its implications. There's something for everyone in "Broadband Reality Check: The truth behind America's digital decline." It is published by the venerable Consumer's Union (publishers of the gold-standard, ad-free, Consumer Reports), The Consumer Federation, and the FreePress.

The paper ruthlessly lays out the facts: the US is falling rapidly behind other nations in broadband penetration, available speed, and price. This gap is not closing but is rather expanding. We continue to lose ground. It methodically dissects the the usual excuses of the incumbents and their apologists--population density and "regulation" offer no excuse for the incumbents poor performance vis-a-vis the rest of the developed world. (In fact the lack of appropriate regulation is part of our problem.)

This is clearly due, the author's unflinchingly point out, to the raw fact of duopoly control of the market--with large segments of that market an effective monopoly. They put to rest any wistful thinking that "third way" and "alternate platforms" like satellite, wireless, and broadband over powerline provide any real competition for the wireline duopoly. That segment is a minuscule percentage of the market and its market share is not growing but actually getting smaller. No technological white knight is in prospect. (Lest there be any doubt about this point: the FCC is currently bringing its auction of prime wireless real estate (spectrum) to a close. The incumbent telecoms--the baby Bell phone companies, their wireless arms, and a new consortium combining the major cable companies and the formerly independent Sprint--appear to have purchased control of the vast majority of that "new" spectrum. If you think corporate wireless 3G and 4G is going to give us any pricing relief--well, I can only say your dreams are pleasant. Letting the current incompetent monopolies buy up any hope of future competition is one of the most astonishingly bad bits of public policy this nation has seen.)

The study goes on to flay the FCC's absurd definition of broadband (200 K!b) and its method of counting broadband penetration. If even one person is a zip code is offered broadband that exceeds the silly speed then all the people in the zip are counted as "having access" to broadband. This particular ploy is used to great effect by our own BellSouth who tells our legislature that almost the whole state has access to broadband using FCC figures. This is because they count all those areas where they might could (should anyone know to ask) provide broadband right next to their local switch in a rural area. They concede, when asked, that they don't really offer that to the public....but they could. --Amazingly self-serving book keeping. And the FCC aids and abets their deception.

One bit that particularly interested me was the discussion of the digital divide. The digital divide still exists and is a persistent feature of the telecomm landscape. The major dividing lines remain between rural and urban and between wealthy and poor. They document that it is not the cost of computers that keeps poorer people out of the valuable buying and selling markets of the internet but the ongoing high cost of internet service. This is a point we've made repeatedly on these pages but it remains true: LUS' prices and the real wireline competition it will bring will do more to bridge the digital divide in Lafayette than any other single project.

The study is well worth your study...take a look. And spend a little time thinking about how to get out of the tough place we've gotten ourselves into.

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